Review: The Startup Way

In the book ‘The Startup Way – How Entrepreneurial Management Transforms Culture and Drives Growth’, the author Eric Ries shows how you can apply the Lean Startup mindset and techniques in every organization. How do you ensure that you enable continuous innovation within the existing organizational structure? How do you create support and what opportunities and threats are there in scaling up such an internal startup?

The book consists of three parts. In the first part, we look at the modern company and we see why traditional management practices no longer satisfy. The second part describes a roadmap to transformation or the ‘how’ of The Startup Way. The last, smaller, part three ‘the big picture’ deals with the question of what happens when the transformation process is ‘completed’. Throughout the book we get a multitude of examples from the author’s own practice at companies such as GE, IBM, Intuit and the government of the United States.

In the first part the modern company is designed. What does uncertainty mean, how do we deal with failures, what is the role of the leader when the way in which companies grow up, changes and to which you can recognize a modern company. A next chapter focuses on entrepreneurship as a missing function and zooms in on the startup as an atomic unit of work and the integration of startups in the organization. It is a startup state of mind. It’s all about the team. Think big. Start small. Scale fast. We get a tour through various start-up methods. A separate chapter is devoted to refreshing knowledge of and lessons from The Lean Startup and we get many types and examples of MVPs. This part ends with a chapter on a management system for innovation at scale. Within The Startup Way, general and entrepreneurial management are connected through the following shared values: commitment to truth, discipline, excellence and continuous improvement.

In the second part the ‘how’ of the startup method is in the spotlights. Several chapters follow the three phases of The Startup Way: critical mass, scaling up and deep systems and thus provide a roadmap for transformation. The three phases at both team, division and company level can be followed. For each phase, many patterns and examples are discussed with the comment that it is not a step-by-step manual.

Phase one: critical mass:

Start small

Build dedicated, cross-functional teams

Wield the golden sword (clearing away bureaucratic obstacles)

Design a good experiment (hypothesis, next action, risk containment, a tie between what is measured and one hypothesis)

Create new ways to measure success (leading indicators)

Work by exception

Translate this way of working into terms the organization can understand.

Phase two: Scaling up:

Identify the challenges faced by pilot teams

Implement a widespread rollout

Identify and make use of executive-level champions

Train representatives of all internal functions

Establish an in-house coaching program

Set up the mechanisms of metered funding and growth boards

Phase Three: Deep systems:

From gatekeeper functions (delayed) to enabling functions (accelerated). Create a one-page guide that laid out, in plain English, a series of parameters within which teams would be pre-cleared to work

Dual roles: support the entrepreneurial efforts of product and project teams and create their own entrepreneurial process to streamline their own functional responsibilities

Testing and validating

Ideas and way of working must become deeply baked into a company’s DNA.

This section concludes with a detailed explanation of the complex matter of innovation accounting. What is innovation accounting, the role of the growth board and the three levels (dashboard, business case and net present value) to translate the vague language from ‘learning’ to the hard language of dollars or euros.

Growth Board responsibilities:

To be the single point of contact of corporate accountability for an internal startup.

To act as the single clearinghouse for information about the startup for the rest of the corporation.

To provide metered funding to startups.

In the last part, the author sees as the most important application of The Startup Way to build an open and innovative society. How to create government policies that are entrepreneurial-friendly and to use The startup Way as a new social movement in order to respond to the following points:

An epidemic of short-termism

Lack of entrepreneurial opportunity

A loss of leadership

Low growth and instability.

Conclusion. If you have read the Lean Startup then this book is a great addition and offers practical tools, many examples and insights to drive the continuous transformation to more agility by using the internal startup as a building block and to promote entrepreneurship. But do not underestimate it, as a company to go through such a transformation is a hell of a job as this also clearly emerges in this not always easy to read book.